By Mulengera Reporters
At the commencement of the National Development Planning (NDP) 4, July 2025 to be exact, the Finance Ministry tasked the Dr. Joseph Muvawala-led National Planning Authority (NPA) to carry out an assessment on the impact Uganda Development Bank (UDB), which is one of the many avenues through which wealth creation billions are being churned out to support private sector participation in the realization of the country’s long-term socio-economic transformation agenda, is having on Uganda’s economic landscape.
The impact assessment research was completed and the NPA researchers’ finding were recently published and are contained in a voluminous report of 160 pages. The report discovers many great things about the impact UDB has had on job creation, enlargement of Uganda’s export volumes, value addition and domestic tax revenue mobilization efforts by the GoU, among other things.
One of the interesting findings the report makes is the fact that, because its home to economically busiest and most viable districts of Kampala, Wakiso and Mukono, Buganda region continues to astronomically dominate access to the long-term credit financing or capital which UDB is, by law, mandated to give by way of lending to private sector players especially in sector which would ordinarily not attract commercial banks’ funding because, historically, they are considered risky.
The NPA report shows that Northern Uganda and the Eastern region are astronomically disadvantaged as more than 80% of the money goes to Central region which is home to most of the businesses that are bankable and qualify to borrow from UDB where the interest rate, at which long-term financing or patient capital can be accessed, is as low as 12%. That as of 2023, Shs482bn (representing 83% of the money UDB had lent out) had been disbursed to business projects domiciled and based in Central region.
This was followed by Western which had just Shs43bn or 7% of the total monies that had been disbursed. The greater Northern (covering Acholi, Lango, West Nile & parts of Karamoja) had only Shs27bn (or 5%) as Eastern trailed with mere Shs25bn-representing 4%. The NPA report authors flag this state of affairs as not being good for geographical inclusion.
The monies are disbursed basing on the number of business projects that have been assessed by the UDB management and confirmed to be eligible for the long-term financing from the Bank. The NPA report reveals that, because of inability to be found viable or feasible upon assessment, Northern region has very few projects benefiting from UDB funding.
The Greater North, as of 2023, had only 60 (or 12%) of the bankable projects that were active as of that time-followed by Western region with 124 (24%) projects. Eastern region had only 51 projects constituting 10%. Western region was in number two with 124 (or 24%) bankable projects, trailing behind Buganda/Central region which had a lion’s share of 281 projects-constituting 54%.
The total number of active bankable projects in the whole country stood at 516. This failure to have the projects evenly distributed in all the country’s geographical regions is because of the fact the Greater Kampala Metropolitan Area or region, which is under Buganda or Central region, naturally has the most attractive environment for viable business activities.
The report authors assert: “This pattern reflects the higher demand and readiness for financing in the Central region…but also underscores significant untapped potential in the Northern and Eastern regions with higher poverty levels and strong prospects for inclusive growth if more tailored financing and project development support are directed there.”
The report advises on what needs to be done for UDB to achieve equity in the geographical distribution of its financing. That the Board and shareholders should set a certain quota of funds which the management must ring-fence strictly for projects in the two most underserved regions-namely Northern and Eastern. Regional funding targets should annually be set to become part of the Board-imposed KPIs, which the management must deliver and be assessed upon.
The Bank management is also called upon to increase on the monies currently being invested in supporting the preparation of enterprises to become bankable projects among the potential entrepreneurs in the Northern and Eastern regions. There should also be prioritisation of business incubation-enhancing interventions specifically tailored to emancipate Northern and Eastern regions.
Support to popularize and ease business registration and other formalization processes should be increased and this is something the report authors propose the UDB management can deliberately invest in. Such interventions, the report observes, will ultimately increase credit readiness among business projects in the two currently underserved regions.
UDB is also called upon to deliberately reach out and have collaborations with local governments, cooperatives, trading associations and developing agencies already present and operating in the underserved regions. Reaching out and collaborating with the already existing SMEs, with a view to support them accelerate progress towards formalisation, would also go a long way to capacitate them to qualify for long-term financing which the GoU has availed under UDB.
That by deliberately designing and rolling out interventions which are aimed at combating the identified regional disparities, UDB would drive growth that is inclusive of all Uganda’s geographical regions while at the same time unlocking clear enterprise potential that Ugandans in the impugned underserved regions have.
On a good note, the NPA report commends UDB for the business development, capacity building and advisory services rendered to ensure that the Bank’s contribution goes beyond just availing the long-term financing to also invest in training services so that those who take out the money know which best practices and corporate governance minimums to adhere to. This increases enterprise success rates and also recovery or repayment of the borrowed cash.
Actual and potential borrowers are handheld from conceptualisation of the business idea to implementation. Beneficiaries ae assisted with stuff related to concept designing, conduct of the feasibility study, financial literacy and legal structuring of the business. The clients or borrowers are enabled to refine their business ideas even before the money is finally disbursed.
Many youth and women-led enterprises/SMEs have greatly benefited from the UDB skilling, training and mentorship available under the ‘Business Accelerator’ program which disseminates knowledge related to financial literacy, record-keeping, business planning etc. These initiatives have also supported distressed businesses facing loan repayment challenges. Equally praise-worthy is the ‘Enterprise Development Program,’ which UDB continues to implement in collaboration with Uganda Management Institute, Mubs, URSB and NEMA.
The report urges the bank to intensify these financial inclusion barriers-breaking initiatives to Ugandans in the above referenced underserved regions (of Northern and Eastern Uganda) as a way of deepening Uganda’s entrepreneurial ecosystem and pool of bankable projects. That such interventions can turn thousands of would-be unbankable into very viable business projects. (For comments on this story, get back to us on 0705579994 [WhatsApp line], 0779411734 & 041 4674611 or email us at mulengeranews@gmail.com).
